SanDisk 2005 Annual Report Download - page 64

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Proxy StatementProxy Statement
F. The Plan Administrator's authority under Paragraphs D and E of this Section II shall also extend to
any stock issuances, restricted stock units, other share right awards or cash awards intended to qualify as
performance-based compensation under Code Section 162(m), even though the automatic vesting of those
issuances, units or awards pursuant to Paragraph D or E of this Section II may result in their loss of
performance-based status under Code Section 162(m).
ARTICLE FOUR
AUTOMATIC GRANT PROGRAM
I. OPTION TERMS
A. Automatic Grants. The Automatic Grant Program under this Article Four shall supersede and
replace the Corporation's 1995 Non-Employee Director Stock Option Plan, and no further stock option grants
shall be made under that plan on or after the Plan Effective Date. However, all options outstanding under that
plan on the Plan Effective Date shall continue in full force and effect in accordance with their terms, and no
provision of this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of
those options with respect to their acquisition of shares of Common Stock thereunder.
Option grants shall be made pursuant to the Automatic Grant Program in effect under this Article Four
as follows:
1. Initial Grant: Each individual who is first elected or appointed as a non-employee Board
member at any time on or after the Plan Effective Date shall automatically be granted, on the date of
such initial election or appointment, a Non-Statutory Option to purchase not more than one hundred fifty
thousand (150,000) shares of Common Stock, provided that individual has not been in the employ of the
Corporation or any Parent or Subsidiary during the immediately preceding twelve (12) months. The
actual number of shares for which such initial option grant shall be made shall (subject to the
150,000-share limit) be determined by the Plan Administrator at the time of each such grant.
2. Annual Grants: On the date of each annual stockholders meeting, beginning with the 2005
Annual Meeting, each individual who is to continue to serve as a non-employee Board member, whether
or not that individual is standing for re-election to the Board at that particular annual meeting, shall
automatically be granted a Non-Statutory Option to purchase not more than forty thousand (40,000)
shares of Common Stock, provided that such individual has served as a non-employee Board member for
a period of at least six (6) months. There shall be no limit on the number of such annual share option
grants any one continuing non-employee Board member may receive over his or her period of Board
service, and non-employee Board members who have previously been in the employ of the Corporation
(or any Parent or Subsidiary) shall be eligible to receive one or more such annual option grants over their
period of continued Board service. The actual number of shares for which such annual option grants are
made to each continuing non-employee Board member shall (subject to the 40,000-share limit) be
determined by the Plan Administrator on or before the date of the annual stockholders meeting on which
those grants are to be made.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value
per share of Common Stock on the option grant date.
2. The exercise price shall be payable in one or more of the alternative forms authorized under the
Discretionary Grant Program. Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
C. Option Term. Each option shall have a maximum term of seven (7) years measured from the option
grant date, subject to earlier termination following the Optionee's cessation of Service.
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